Insider Intelligence released a list of their biggest forecasting shocks from what they had originally predicted in February 2020 to how the year actually unfolded.
Nobody could have predicted we would have the year we did, but you can use this information to ensure you're set up for success as we get ready to say goodbye to 2020 and hello to a new year.
According to Insider Intelligence's 2020's Biggest US Forecasting Shocks, this was the year of ecommerce and online purchases. Below we will highlight how consumer behavior has changed and how you can adjust your operations to meet new consumer demands. The pandemic will not be our reality forever, vaccines are being approved and distributed, and many people are feeling a renewed sense of optimism. The impact on our new normal in terms of the adaptation of ecommerce and digital tools, however, is here to stay. Consumer behavior and preferences have, in many ways, jumped forward several years over the course of just one year, and they are not likely to return to pre-pandemic behavior.
Ecommerce Reigns Supreme
Consumers adopted online shopping to replace their regular spending on items such as canceled vacations, events, and activities. This resulted in a $120 billion dollar increase in ecommerce spending over the original forecast for 2020. Increased online spending means that there was a decrease in brick-and-mortar spending at traditional retail stores, combined with lockdowns and store closures the retail spending forecast is showing a $234 billion dollar decrease compared to pre-pandemic spending.
What this means for you: You can no longer rely on a pure retail sales strategy. Diversifying your sales channels to include ecommerce options is key to capturing consumer dollars for your business. This doesn't mean that retail is dead, brick-and-mortar spending still represents over $4.7 trillion in consumer spending a year, but embracing an omnichannel strategy makes your business more resilient and flexible.
Contactless Payments Gained Popularity
The US witnessed large gains in the number of businesses offering contactless payments to customers. While tap and pay is a common payment method in other countries, including Canada, it has yet to become widely adopted across the US in terms of both consumer payment cards and hardware with NFC technology. According to Insider Intelligence's report, this year, there have been 17.6 million new users who have adopted mobile proximity payments. Mobile proximity payments include the use of digital wallets on consumer smartphones at the point-of-sale to complete a transaction. This change signifies a massive shift in consumer behavior that will last much longer than the pandemic. Consumers are using the technology available on their phones to bypass their banks and add their payment information to their phones. From here, they simply hold their device close to an NFC-enabled terminal or card reader to complete the transaction. According to the report, the original projection of consumers using these payment methods was 69.4 million. This number was revised to be 86.9 million.
What this means for you: While consumer's desire to avoid touchpoints in the shopping experience may decline as the threat of COVID-19 recedes, the convenience they enjoy with mobile proximity payments is likely here to stay. If your business does not already have an NFC-enabled terminal or card reader, now is a great time to invest. These new terminals not only accept payments from digital wallets, but they are also more secure and can help reduce your risk of accepting fraudulent credit cards.
The Food and Beverage Industry Embrace Online Ordering
As people found themselves confined in their homes without their usual outings for coffee, restaurants, and date night, many consumers turned to online orders for pickup or delivery from their favorite restaurants. The Food and Beverage Ecommerce space saw a 13.3 billion dollar increase in spending throughout 2020. According to Insider Intelligence, this was the largest increase in spending out of all the ecommerce categories. As the end of the year approaches, the adjusted forecast reflects a 41.3% increase in spending on food and beverage ecommerce.
What this means for you: Restaurants and those in the food and beverage industry have traditionally focused on serving customers in-person only. While the introduction of third-party delivery applications has spurred an increase in takeout and pickup orders, these apps have high commission fees and cause restaurants to lose their direct relationship with their customers. If you haven't invested in your ecommerce channels for your restaurant, now is the time to give it a try. Adding online food ordering to your website is an easy way to take back control of your takeout orders and maintain relationships with your customers. As a bonus, those orders will go directly to you, and the tips from customers go straight to your staff. Whether you're adding specialty items only, date night meal kits, or a condensed version of your regular menu, adding online sales channels will help you capture more orders from customers. Having access to ecommerce channels also makes your business more resilient in the event of an unforeseen disruption to your operations.
Click and Collect Sales Takeoff
Curbside pickup has won over consumers across the US due to its contactless nature, convenience, and accessibility. The widespread adoption of click and collect services represents a large shift in consumer behavior. While still a sizable market pre-pandemic with an impressive sales total of over $50 billion, the revised forecast is now over $58 billion, an over 15% increase from the initial estimate.
What this means for you: Click and collect shows that consumers are open to new ways of ordering and collecting their purchases. This payment experience combines ecommerce with traditional in-person sales. Customers order online or over the phone, before visiting your retail location to collect their purchases. We don't yet know how customers will continue to utilize click and collect services post-pandemic but the success and growth in click and collect grocery collection demonstrates how much consumers enjoy these services. A benefit for your business is that you do not need to worry about the shipping and delivery aspect of ecommerce with click and collect as the consumer takes on that responsibility for you.
What These Trends Could Mean for 2021
Each of these trends indicates a potentially permanent shift in how consumers want to purchase from businesses. Businesses can make the most of these trends and capture sales from customers by focusing on providing a contactless and flexible payments experience. Giving customers different ways to interact with your business from a tap and pay checkout in-store, to an online store that offers delivery or curbside pickup ensures your sales experience reflects the latest in payments trends. Adopting omnichannel payment solutions doesn't have to be difficult, the latest in payments hardware should all offer tap and pay that is compatible with the latest mobile devices, and creating an online store is easier than ever.